If Ben Franklin had to hold 401(k) education meetings, surely he would have had participants leaning forward in their chairs.
So why do many 401(k) advisors struggle with participant education? It’s because most advisors fail to make these sessions interesting. And the fastest way for advisors to make 401(k) education interesting, is to focus squarely on the participants themselves. Having worked with advisors for 25 years, I’ve discovered that there are three simple ways that advisors can involve and engage their plan participants.
Show them the money, in terms of today.
Start with what participants already connect to, their current take-home pay. Why? Because getting participants to consider saving more means demystifying how that savings will impact them in the near-term. And you have to do this with real data, as in the participant’s current paycheck. Abstract contribution percentages just don’t work.
With TRAK, advisors are demonstrating, in both group meetings and one-on-one, how participants’ take-home pay is changed when saving for retirement. And advisors using TRAK can do this instantly, it is not delayed– that’s how they quickly overcome objections about not having enough money to save for retirement.
Walk them into the future with a projected account balance.
Nothing gets participants leaning forward more than showing them how much their retirement account could be worth when they retire (based on a few assumptions, of course). TRAK’s Gap Analysis report is used by advisors to take that conversation one step further. It graphically illustrates a participant’s current paycheck, retirement shortfall and the impact on take-home pay for funding the shortfall. When participants see the gap, they lean forward in their chairs.
Demonstrate the cost of waiting to save for retirement.
Many 401(k) participants are in denial about time. By showing participants the actual cost of delaying their saving, it motivates participants to take action to correct this sooner, not later.
Advisors using TRAK can easily demonstrate the concept of opportunity cost in tangible terms. In a matter of minutes, advisors show participants their individual situation and what happens if they increase their level of savings right now, versus waiting.
The truth is, participants who are fortunate enough to have advisors who use TRAK, are better informed and more engaged in the planning and saving for their retirement. And when we push ourselves to do meaningful 401(k) education, everyone is better off.
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How Advisor-Driven Education Motivates Participants
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